Over the last few weeks, the massive turmoil in the lumber commodity markets has slowed down with pricing stabilizing even if the supply issues have not. Taking the place of the lumber in the pricing volatility is steel and metal goods. The cause of this issue is the import tariffs and anti-dumping duties on steel goods from overseas. While it is still a bit early to tell exactly how far the tariffs will go, we do know that many suppliers from rebar to roof metal are increasing their cost to us right away.

In the last week, we have seen announcements from one roofing supplier who is raising prices by 10% based on covering their replacement inventory costs. Most of the rebar we sell is produced in North America, but the consensus is that the price has been artificially low for quite a while to compete with import lines. The price of rebar is expected to jump accordingly. Fasteners and structural steel hangers will follow the same pattern.

To make sure we protect our customers, we have taken similar actions to those we took before the wood prices skyrocketed. We have purchased adequate supply of everyday fasteners and rebar to make sure that we have supply and that we have it at a fair price. When the time comes for us to replace our volume purchases at our normal stock levels, we will be adjusting our pricing accordingly to cover our replacement cost.

As a final note on all of the market volatility, we are working closely with our suppliers to be as transparent as possible about pricing issues and the reasoning behind the increases. We are also working with them to make sure that we set our retail pricing correctly given the competition and perception of value in the market. Twice this year, we have substantially lowered our retail pricing on full lines, structural steel and paint, to make sure that we are doing our part to meet your expectations. We will continue to look for ways to help save and we thank you for your trust in these crazy times.

If you ever want an opinion on where things are heading or why, please reach out to me via email or at the stores by calling 360.452.8933. You can also follow this blog and our social media platforms to stay current on what is happening in the world of building materials.

As promised, I am writing to keep you updated on the world of commodity lumber prices. In laymen’s terms, the market is absolutely on fire. Every week, and often multiple times in the week, the print prices are climbing. The notes below come straight from the presses of one of our primary lumber suppliers.

OSB: All Mills are still off the market. Inventories are very low, and trucking continues to be late!

Panels: Published pricing was up on all items. Order files the week of 3/5 to 4/2. Pricing is up on everything!!

Lumber: Up, up, and away!! Way up on all fronts. Stock levels are limited, and mills are on the struggle bus to get loads out.

Studs: All trims are up again this week in Hemlock and Doug Fir. Order files continue to be 2-4 weeks out.

At this point, print on OSB was high enough that it should be retailing for over $19 per sheet. The last time the market saw pricing this high, was directly following the building boom in 2006 on top of the hurricane Katrina impact. It is early February and much of the country is still in the cold, so we have not seen anything close to peak demand that will come in the spring and summer. As that happens, $23+ per sheet of OSB will be in the market.

Lumber is trading higher now than it was at the height of the building season last August. Extended lead times and escalating prices indicate that real price correction is not in the foreseeable future. Panel inventory is following the same trajectory.

If you are a owner ready to build this year, I would encourage you to ask your builder for an escalation clause in the contract. That gives you a pause button if the increased material cost is crushing your budget. As a builder, having the clause can also help you protect the profitability of your business, by not providing the material cost overruns out of your pocket.

We have invested very heavy in our inventory to try and take away some of the sting of the increasing market. Our goal is to help you ride the storm by having you under our umbrella. As we get closer to re-entering the commodity markets, we will have to follow the market to cover the replacement cost of our more normal inventory volumes. As this happens, we will be sure to keep our communication open so that you are as prepared as possible.

Thanks for following the market with us and please follow our social channels or this blog to stay up-to-date on the weekly, if not daily, changes in the world of commodity lumber.

If you are like me and you lay awake at night thinking about commodity lumber, then please read further. If you do not pay attention to lumber pricing but you have it in your mind to expand your living space or build your dream home this year, then you really should read further. With the unprecedented hurricanes/ flooding along the gulf coast, wild fires in California, and the nationwide building boom still raging, supplies will struggle to keep up with demand.

Right now, we are experiencing shortages on commodity panels like OSB because some mills are off the market (OTM) and others that have product cannot get a rail car spotted. Angeles Millwork placed an order for a truckload of OSB three weeks ago and we should see it by the end of this week. Without even seeing this new stock on the ground, we are placing purchase orders for Hartnagels and Angeles Millwork that should arrive in early March. We are taking this position for two reasons, first and foremost is to protect our supply in and through the building season. The second reason is to do everything we can to help protect our customers from commodity traders that will push prices on OSB up over $20 a sheet in the near future. CDX panels are facing the same challenges with order files pushed into late February.

Outside of the panel inventory, lumber prices are following much the same trajectory. Most of the Douglas Fir fiber we supply comes from the Oregon coast and is not immediately impacted by the counter veiling duty issues. The supply problem comes from directing materials out of our markets and into the rebuilding areas. One area of particular concern is the wide stock, 2×8 through 2×12. On a percentage basis, pricing increased from week to week by more than double digits with some lengths moving up by more than $90/MBF (per thousand board foot). The narrows, 2×4 and 2×6, also saw significant gains with pricing moving up by as much as $35/MBF in some lengths.

As of right now, I have not seen any price increases on engineered word products (EWP) but I do expect them to follow as they will run into the same supply and demand issues related to OSB and veneers used to manufacture i-Joist and laminated beams.

Moving out of the winter and into the spring, we are trying very hard to get a clearer picture of what is happening with commodity markets so that we can better serve and protect our customers. When things change significantly one way or another, I will write about it in this blog and through our social media platforms to keep you all updated. This season has the promise to be very active so please stay tuned.

Selecting the right piece of framing lumber for your project does not have to be as complex as the grading rules. This guide to the grades of lumber, is meant to help you get past the uncertainty by giving you the knowledge of what the grades allow and how to achieve an apple to apple comparison of what you see.

Every species has different characteristics for strength and appearance, but they are all graded on the same rules from the American Lumber Standards Committee. The grades, for all that they do, are not much more than a way of telling the user what kind of quality they are buying.

The higher the grade, the better the lumber.

Before going into the Lumber Grading Standards chart to understand grades we need to understand each defect presented;

Checking – A crack in the board that happens along the growth rings and does not go through the entire board.

Grain – Determined by the number of growth rings in the board. Typically measured in rings per inch and is viewed from the end grain of the board.

Knots – A naturally occurring defect in the board caused by branches as the tree grows. Small tight knots are perfectly fine but large loose knots that may fall out are of greater concern.

Pitch or Sap – How trees heal wounds from pruning or fight off other diseases that could be otherwise harmful to a healthy tree.

Pitch Pockets – Places in the board where the tree has grown around the sap enclosing the wound. These pockets coupled with the tight bark layer can be found in the wide face of a board and are not the same as edge wane.

Shake – The separation of woods growth rings that occurs either on the face of the wood or below the surface.

Skips – A manufacturing defect where planners and saws “bounce” along a board or pull the grain, causing an uneven surface to be presented.

Grain Slope – A measurement of the deviation from the natural growth of the board. Simply put, it is the board cut parallel to the grain or across it.

Splits – Cracks in the wood that go all the way through the board.

Stains or Discolorations – Can be caused by insects, fungal decay, or heartwood/sapwood. Some stains have no effect on the performance of the wood, while others limit the strength of the wood. This is because they come from the fast-growing center of the tree.

Wane -The uneven edge of the tree that used to contain the bark of the tree before it was milled.

Warp – In a board is the deviation from straight and true and is called by many different names.

A bow in the board is the end to end change on the wide face. This looks like the bottom of a boat.

A crook in the board is the warping that happens along the narrow edge. This looks like a hockey stick.

A cup in the board is when the wide face curves with the flat grain creating a hollow in the board. This looks like a canoe.

A twist in the board is a combination of multiple warping defects. This often looks like a boomerang or an airplane propeller.

Clear wood requirement is the amount of good wood left after all the defects have been removed from the clean faces of the wood.

The chart below shows the seven grades of framing lumber and the allowable deviation from a perfect piece of lumber.

Lumber Grade Stamps

The final piece of the lumber puzzle is the ability to look at a grade stamp to understand what it is telling you. All stamps on lumber tell us the exact same information; (a) the grading agency, (b) the mill designation, (c) the approved grade, (d) the wood species group, (e) the moisture content.

Common Application

In most jurisdictions, the building code requires #2 Structural, commonly referred to as #2 & Better. This is why it is found at most lumber yards and home centers in your area. Lumber yards will differ on the primary species family they carry. One yard might sell Douglas Fir for the strength characteristics while another chooses Western Hemlock because it is cheaper while still meeting the same building codes.

In many commercial uses, select structural lumber is required because of the strength of the wood fiber. Typically, these are applications with very high point loads due to the increased capacity of the structure itself for storage or for people. Most residential construction that is done with Select Structural lumber is done because the builder and the homeowner prefer the quality of the fiber.

The lesser grades of lumber are often used where structural codes do not matter in industrial or temporary applications. These can be things like pallets and packaging for shipment or concrete footing work where one good face will usually be adequate.

Whatever lumber you choose, knowing the grade will help you determine if it is right for your project. Grading used in conjunction with the design tables will help make sure that your project lasts for as long as you want it to.

For more information on the framing lumber grading rules, please visit the following sources;

During this time of year, we typically see increases in lumber and commodity pricing based on several factors. What we are seeing now is almost beyond belief in the pricing increases. My hope is not to scare you about why pricing is going up but rather, to educate you on the reasons and to provide some clarity on why we are following the market.

All of us who sell commodity lumber waited all winter long for the current administration to decide what to do with the expired softwood lumber agreement, (the counter veiling duty). We all got to experience the inflated pricing to protect the mills from the possibility of a retroactive tariff when it was finally announced at 19.88% in late April. Moving ahead a few more months and the next big run up was caused by a separate issue between the US and Canada and the subsequent anti-dumping duty at 6.87% effective June 30, 2017.

Per Investopedia, an anti-dumping duty is a protectionist tariff that a domestic government imposes on imports that it believes are priced below fair market value. Dumping is a process where a company exports a product at a price lower than the price it normally charges on its own home market.

Nearly all the lumber we sell at our stores is domestically produced and not subject to the tariffs and duties. Unfortunately, the panels and cedar products are imported so the combined tariff means higher prices. The additional duties put pressure on the domestic supply and tend to dry it up quickly as the volume buyers and traders look for the best deal. Once that supply is gone, and it is now, the domestic producers raise prices based on limited supply with a very strong demand.

Further adding to the limited supply issue and the role of import lumber in keeping prices stabilized is the threat of fire in the Provincial forests in Canada that is keeping logging at a minimum. We also had a mill fire that took an OSB mill out of commission along with normally scheduled summer maintenance at some mills. (Some suppliers we talk to think the fire threat is gamesmanship being played based on the CVD/ADD from the US.)

The real estate market around the country is very strong with very little inventory so builders are experiencing a boom when they have the labor to get the work done.

Our guess is that the market remains strong with higher than normal pricing through the building season with prices holding in the weeks ahead. If the rumors are true about a new ten-year softwood lumber agreement, we could see pricing stabilize with some market correction before the end of the season.

After months of speculation, it finally happened, the Trump administration announced that the countervailing duty on Canadian softwood would be set at 19.88%. If this was the end of it, we could let the smoke clear and start anew in the weeks and months ahead. Unfortunately, this is not the case so we have a long protracted fight on our hands that will keep the consumer doing what they always do, pay the higher price. Let us look at what we do know and what we can expect.

Through the regulatory process and our part of the NAFTA agreement, both sides will get the opportunity to state their case in an appeals process. The final ruling on this issues is not expected until sometime in January 2018. If history is a good teacher on these issues, the Canadians have almost always won the argument. Now that we know the fight is a long way from over, let us get down to the more immediate impact on our community.

The first thing I looked following the announcement this morning were the currency markets. As expected, the Canadian dollar declined. In a part of the country that depends on Canadian tourism to support our local economy, the weak dollar does not help. Seeing the restaurants full and the Black Ball moving at capacity is good for all of us that call Clallam County home. At the end of the day, our business is only as strong as the local economy and every part helps.

The second thing I looked at this morning was the lumber markets to see what was happening. Surprisingly, everything has remained fairly calm with very little commotion in price files. Of greater concern to us, the impact of this announcement on supply has yet to be fully felt. We know that we are running into shortage issues in the current market.

If any big producers decide to take drastic action, like not selling into the US market it could leave us very short on supply. We are conducting a survey to find out how you would like us to respond in the event supply of the #2 & Better Premium we currently offer becomes unavailable. If you would like to help us, please click here.

The last thing I did this morning was grab the phone and ask for input from our buyers, our supplier partners, and our network. I learned that most everyone is in the same position as we are with more questions than answers. That consensus opinion is to not take speculative positions on excess inventory in the near term.

We will follow the market and replace what we sell and try to maintain our business to be nimble with the market. This will keep our pricing current and eliminate the potential for big profits and big losses. With that position, we will be relying heavily on our buyers to ensure that we are refilling our stock more frequently in addition to our vendor managed programs.

Like everything in life, the dust will settle on this issue. When it does, we will be here taking care of our friends and neighbors just as we have been for 111 years. As always, if you have any questions or concerns about the market; we are here to help. Please follow our blog or friend us on Facebook for updates as they become available. I can also be reached via email at kellyf@lumbertradersinc.com or in the store @ 360-452-8933 for more pressing concerns.

As I follow the commodity markets and report back to you in terms of our current pricing, I think it is important for you to also see where the markets are headed along with what is driving the changes. Right now, the biggest two factors in lumber pricing are increasing demand and the unknown regarding the countervailing duty on softwood imports from Canada.

Let us address the supply and demand issues first because they are much easier to understand and they indicate some other changes in the market that must be addressed as part of the overall cost of building in the current market. With home building booming in the major metro areas around the United States, mill level order files are pushed out for weeks, and months in some cases, allowing the mills to charge more for the same product. The more common the item, like OSB and CDX, the longer the order files are out giving the mills the power to hold pricing higher for a longer period. With good weather now returning to much of the country, the big users like California are starting to add pressure which will also allow the mills to maintain price and more likely, increase it in the weeks ahead.

The commodity chart shows how our pricing has changed for 2017. It is important to note that some market dips are indicated, most of those are weather related locally and nationally with the overall trend showing pricing increases in all lines. Beginning this week, we will keep this commodity pricing chart updated on our website along with the commodity price list for quick reference into what is happening in the markets along with showing overall market trends.

The next logical question about the supply demand equation is what, if anything, is happening to slow the prices down. Unfortunately, the answer to that question is an expensive one. With the material cost for a house being about 20% of the total cost, labor makes up the next 60% with the balance being given to the state and local economy in taxes and fees related to building process. A recent trade publication for the lumber and building materials industry indicates that it is taking almost twice as long to build a house now because of the labor shortage for sub-contractors in every trade from the pre-recession levels. This labor shortage is leading to large increases in cost for the available labor. The shortage of labor means that demand has not peaked and is likely to remain strong for the foreseeable future. It also means that customers will be trading higher lumber prices for higher labor costs.

Right now, the market is speculating wildly on what will be passed down as the tariff on softwood lumber in the form of the countervailing duty. The market is also concerned, and rightfully so, about the likelihood of the tariff being applied to orders going back up to ninety days. The fear of the unknown is pushing markets higher to make sure that all bets are covered on a worst-case scenario and for that we are all paying the higher price.

What we do not know about the duty is how it will affect commodities at different price levels because the threshold has been poorly defined. Items like cedar and finish lumber that trade at higher per thousand pricing will undoubtedly feel the effects. Items like OSB and 2×4 should not be affected as much because they generally trade below what is believed to be the price threshold. Without knowing where it will land, everything is subject to pricing increase to make sure the mill level profits are protected.

These insights are based on information I gather from our supply partners and industry connections on a weekly basis. Please stay tuned to this blog, our website, and our social channels for updated information as it becomes available. If you have any questions about what I see in the market or you would like some additional insights, please contact me at kellyf@lumbertradersinc.com or 360.452.8933.

It looks like the weather on the east coast is having a declining impact on lumber and commodity pricing, especially panels, this week and the early indication is that things should remain stable for the near term. As I type this, an email from our commodity lumber supplier arrived indicating a mid-week price change with some up and some down further leading to us to believe the order files at the mill level are consistent from week to week for the moment.

As the market stretches, relaxes, and stretches again, our stores are deeply committed to looking for opportunity and ways to help protect our customers. In December, our team committed to a large quantity of kiln dried cedar decking knowing that large price increase was not only likely, but very real. This week we took delivery of that decking and that will allow us to provide you with our best possible price AND the quality that we have become known for in our cedar line. Similar commitments were made at our buying shows in February to make sure we remained competitive in our hardware and soft goods lines. Our paint specialist at Angeles Millwork and Hartnagels worked with our supplier this week to finalize our spring buy in the exterior stain lines to ensure we can still offer the best price around for our Stain Sale beginning in late May.

Over the next few weeks we will see changes in cedar, rebar, and timbers. Treated lumber will also be catching up to the framing lumber index in the days and weeks ahead as the manufacturers catch up with the replacement costs. These increases are on top of already announced increases in fasteners and paint that will hit the retail shelves in early April.

If we had a crystal ball and could tell you exactly what would happen in the next few weeks and months, we would be happy to share! What we DO know is the weather will change on the east coast, California will start building again soon, and lumber pricing will follow the supply demand curve of the market. Our bet is that the demand will stay strong and the pricing will follow through the building season without any significant correction until this fall.

To stay informed about the opportunities and challenges in the commodity lumber markets and building materials, please follow this blog or “like” us on Facebook. To see our weekly commodity hot sheet please click here. We publish a new hot sheet every Monday unless the markets dictate otherwise.

As expected the commodity markets are continuing to rise. The good news is that the rather than seeing continued double digit growth, the rates have slowed considerably in the panel markets for things like OSB and CDX. While we do not expect them to take any more drastic jumps in the short term, they will most likely hold this price as the supply demand curve finds a new balance point.

The heavy movers this week are framing lumber, cedar and primed fascia with some products moving up more than 17%. Again, based on our inventory position and the market, we will try and absorb some of the changes in hopes that we can ride out the bump. Some lines that are manufactured will likely hold their increases long term so we must adjust our pricing to match right away.

This week we have also taken additional steps to protect our customer base in the market. We have specifically addressed our purchasing habits for many of our lines to look for opportunity to make sure we can protect the price quotes we have submitted and to make sure we can be competitive in the future. While we still cannot honor quotes much more than a week out, we will continue to look at any opportunity in front of us.

I am happy to report that while the steel markets for rebar and fasteners moved up, we were able to lower our cost compared to the replacement market and consequently our retail selling price on rebar. We have also looked into the composite decking market and taken a stocking position in the TimberTech line that will allow us to sell at much lower retail pricing than we have in the past, typically about 10% less.

On the horizon, we have heard from many of our other suppliers about modest increases in very specific lines into late March and early April. These include some of our roofing products at Hartnagels and fasteners between both stores.

To stay in the loop on upcoming market changes, please follow us on Facebook or subscribe to my blog in the upper right hand side of this post and we will do everything we can to keep you informed about building products, pricing, and information related to construction right here on the North Olympic Peninsula. See newest pricing HERE.

Lumber trading right now is extremely volatile with no end in sight per many of our supplier partners. The cause of the spike in the lumber prices is related to increased demand around the country and uncertainty related to the expired softwood lumber agreement.

With the market growth and the tariff looming, dealers like us are taking on inventory positions that are pushing out order files at the mill level for many months so that we can make sure to cover our customers in the peak season. The tariff is aimed at balancing the pricing between US and Canadian producers that will most likely result is a retroactive tax on the Canadian goods. This has caused the producers to collect the money upfront to protect themselves when, not if, it is imposed. The struggle right now is no one knows what the amount will be so most mills and suppliers are collecting at the worst-case rate.

Since the beginning of the year, our stores have seen our cedar prices grow by more than 40%. Since the beginning of February, we have seen our lumber commodity prices increase by 20-25% with some seeing 35%+. Because we cannot sell our inventory at current market pricing and still make the profits our business needs to survive, we are selling at our replacement cost. We expect treated lumber to follow the commodity markets up at about the same rates in the next few days.

One way we continue to look out for our customers is to look at our inventory position and the price increases to see if we can cover ourselves week to week without passing on the full weight of our cost increases. The down side to this is that we cannot honor our quoted prices beyond one week.

Thank you for your understanding, we are here to help in any way that we can. If you have any questions about the market or need some clarification about a specific segment, please shoot me an email or talk with your sales person. We will continue to watch the prices and adjust up and down as the market dictates along with keeping all of you posted with our weekly lumber commodity hot sheet updates. If you would like to be added to the email list for the Lumber Commodity Hot Sheets please email Josh Bergesen at joshb@lumbertradersinc.com . You can always find the newest lumber commodity pricing on our Blog page, through Facebook and on our Twitter feed.

Thank you for placing your trust in us and we all look forward to serving you in 2017 and beyond.